Natural Grocers (NGVC) Q1 2026 Earnings Transcript

Core Insights - The company is positioned for sustainable long-term growth through various initiatives and operational strategies [1][3] - The first quarter saw a net sales increase of 1.6% year-over-year, with comparable store sales growth of 1.7% [7][9] - The Empower Rewards program has shown strong performance, with members driving higher sales growth compared to non-members [2][3] Sales Performance - First quarter sales comp increased by 1.7%, following an 8.9% comp from the previous year, resulting in a two-year comp growth of 10.6% [2][7] - Private label products accounted for 9.6% of total sales, up 70 basis points from the previous year, indicating strong customer appreciation for the brand [1] - The company experienced a modest decline in SNAP EBT transactions, which represent approximately 2% of net sales, but this was deemed immaterial to overall sales performance [8][9] Financial Results - Daily average comparable transaction count increased by 1%, with a transaction sizing increase of 0.7%, reflecting annualized product inflation of approximately 2% to 2.5% [7] - Gross margin decreased by 40 basis points to 29.5%, primarily due to higher inventory shrink, while operating income increased by 97% to $14.6 million [8][9] - Net income rose by 14% to $11.3 million, and diluted earnings per share also increased by 14% to $0.49 [9] Operational Initiatives - The company plans to open six to eight new stores in fiscal 2026 and aims for 4% to 5% annual new store unit growth [4][11] - A relocation of one store was completed in the first quarter, which is part of the store development strategy to enhance sales growth [4] - The company is committed to its nutrition education program, which has been recognized for advancing sustainable practices in the food sector [5] Outlook - The company maintains its full-year guidance, expecting daily average comparable store sales growth between 1.5% and 4% and diluted earnings per share between $2 and $2.15 [11][12] - The outlook anticipates modest inflation and relatively flat year-over-year gross margin, depending on promotional activity levels [12] - The company is investing approximately $0.12 of diluted earnings per share in new store openings, reflecting a commitment to growth despite current consumer environment uncertainties [12]